Tennessee Lakefront “Pocket Listings”, What Are they?

What is a pocket listing?

When the time comes to sell a home, most people contact a real estate agent and get their place listed online on sites like www.LakefrontLiving.com/tn—But there is another, more unconventional way, and it’s called a “Pocket Listing”. So what is this type of listing, anyway and why is it, or is it not a good idea?

This is a property that an owner wants to sell, but agents and buyers won’t find it listed on the multiple listing service.  This is the database they use to search for homes and properties for clients. Likewise, home buyers won’t find pocket listings online or by a “For Sale” sign in the front yard, either. Instead, the real estate agent who’s been hired for a pocket listing keeps it in his “Back pocket” to solicit a buyer themselves or possibly sell it “In-House”

Pocket listings constitute only a small percentage of total listings, probably under 10% of the national total. So why would anyone choose this unconventional approach? Here’s why it appeals to certain sellers, and how to decide if it’s right for you.

The upsides of a pocket listing

• To maintain privacy: First and foremost, “Some people don’t want the general public to know they’re selling, even though this is one of the best ways to get exposure for their property! These sellers also are hoping to sidestep having just anyone looking  through their house.
• To test the market: Some sellers believe they can get an idea of what interested buyers are willing to pay for their home before making the listing public on the MLS, hoping to be less likely to have to reduce the price if and when they finally do post the property on the MLS (more on why that’s bad next).
• To spend less time on the MLS:  Some sellers believe that buyers start to wonder what’s wrong with a property if it’s been on the MLS for weeks and hasn’t sold.
• To give them the push they need to sell: Some sellers don’t want to list their homes, but would consider selling if they could fetch a certain price. A pocket listing sometimes gives a Realtor the leeway to find a motivated buyer who is looking for that exact type of property.
• For a reduced commission: Most Realtors charge a flat % of the home’s sale price for commission, but some sellers believe a shrewd negotiator could knock that down a point or two because the Realtor doesn’t have to invest a ton of money or time marketing the property.

The downsides of a pocket listing 

While pocket listings have some pluses going for them, they do come with some obvious drawbacks:

• Limited exposure: A property listed on the MLS has the potential to be seen by millions of people, worldwide, which means odds are good you’ll find a buyer fast.
• Lack of walk-in traffic: Sure, many people shop homes online, but it’s also common for people to cruise neighborhoods they like to see if any “For Sale” signs are up. Also, neighbors might be looking for a nearby home for friends and family.
• A lower price: You’ll never know what price the market will bear if you never actually put your home on the market. Less interested home seekers means fewer, and possibly lower, bids. Because the property is not marketed widely, a seller may only get a slim number of prospects and may never approach competitive pricing for the home. It’s also hard to ensure an accurate price if other pocket listings in your neighborhood have thrown off the numbers. If a property is a secret — as most pocket listings are — there’s no competition to drive the price up, and virtually no leverage to negotiate.
• Pocket Listings Bring Down House Comps. Comps, by design, attempt to compare like-houses in the area. Though comps are the best metric for pricing your home, they’re not an exact science. Pocket listings could throw off the market value for your neighborhood. Many times, properties offered as pocket listings are never entered into the MLS once they are sold. This limits the available information about the market and makes it difficult for other agents, buyers, and sellers to determine values of nearby properties. It is also difficult for appraisers trying to determine the current market value of a particular property.”